PROLOGUE: The WorldBank, who is together with the IMF (International Monetary Fund) a key player and deeply embedded in the Corona Plandemic, studies continuously the impact of the man-made contagion and the corresponding machinations of the global arrangements and governmental actions. Openly they speak of e.g. "Wave 1 completed" or "Wave 2 in planning". Though e.g. Somalia (example of country-study below) has one of the most resilient people on Earth, they "proudly" can demonstrate the economic decline of around 30%, which prepared now the playing field for the upcoming "elections" in order to keep the geo-strategically important country and its people firmly in the grip of the international interests.

COVID-19: Impact on firms

ImageCOVID-19 has affected all parts of the world. The breadth and depth of the effects of the outbreak on the world population and its productive capacity remain uncertain. However, it is clear that many government measures to curtail contagion will have a direct impact on the private sector—including the hundreds of millions who derive their living from its activity.

As part of the overall response of the Development Economics Vice Presidency (DEC) of the World Bank, the Enterprise Analysis Unit has been developing different approaches to measure the virus’s impact on the private sector.

The Indicators presented here provide a snapshot of the impact of COVID-19 on the private sector based on the Follow-up Surveys. All datasets are available on the data portal

Where are Follow-up Surveys taking place?

Africa

     

Economy

Baseline Survey

Year

Status of Round 1

Profile -   Round 1

Status of Round 2 Profile- Round 2
Chad 2018 Completed Country Profile    
Guinea 2016 Completed  Country Profile    

Mozambique

2018

Under implementation

     
Niger 2017 Completed Country Profile    

Somalia

2019

Completed

  Under implementation  
Togo 2016 Completed  Country Profile    

Zambia

2019

Completed 

Country Profile Under implementation  
Zimbabwe 2016 Completed  Country Profile    

 

East Asia Pacific

     

Economy

Baseline Survey

Year

Status of Round 1

Profile- Round 1

Status of Round 2 Profile - Round 2

Mongolia

2019 Completed  Country Profile Under implementation  

 

Europe & Central Asia

     

Economy

Baseline Survey

Year

Status of Round 1

Profile - Round 1

Status of Round 2 Profile - Round 2
Albania 2019 Completed  Country Profile    
Armenia 2020 Under implementation      
Armenia* 2019 Completed       
Azerbaijan 2019 Under implementation      
Belarus 2018 Completed       
Bosnia and Herzegovina 2019 Under implementation      

Bulgaria

2019

Completed 

Country Profile Under implementation  

Croatia

2019

Completed  Country Profile Planned  

Cyprus

2019

Completed 

Country Profile Under implementation  

Czech Republic

2019

Completed

Country Profile Planned  

Estonia

2019

Completed Country Profile Planned  
Georgia 2019

Completed 

Country Profile Completed Country Profile

Greece

2018

Completed 

Country Profile Under implementation  

Hungary

2019

Completed  Country Profile Planned  

Italy

2019

Completed 

Country Profile Under implementation  
Kazakhstan 2019 Under implementation      

Latvia

2019

Completed  Country Profile Planned  

Lithuania

2019

Completed Country Profile Planned  
Moldova 2019 Completed Country Profile Completed Country Profile
Montenegro 2019 Under implementation      
North Macedonia 2019

Completed

Country Profile Planned  

Poland

2019

Completed 

Country Profile Under implementation  

Portugal

2019

Under implementation

  Under implementation  

Romania

2019

Completed  Country Profile Under implementation  

Russian Federation

2019

Completed 

Country Profile    
Serbia 2019 Under implementation      

Slovak Republic

2019

Under implementation

  Planned  

Slovenia

2019

Completed  Country Profile Under implementation  

 

 

Latin America & the Caribbean

     

Economy

Baseline Survey

Year

Status of Round 1

Profile - Round 1

Status of Round 2 Profile - Round 2
El Salvador 2016

Completed 

Country Profile Under implementation  

Guatemala

2017

Completed 

Country Profile Under implementation  
Honduras 2016

Completed 

Country Profile Under implementation  
Nicaragua 2016

Completed 

Country Profile Under implementation  

 

Middle East & North Africa

     

Economy

Baseline Survey

Year

Status of Round 1

Profile - Round 1

Status of Round 2 Profile - Round 2
Jordan

2019

Completed  Country Profile Planned  
Lebanon 2019 Completed   Planned  

Malta

2019

Completed

Country Profile Under implementation  

Morocco

2019

Completed 

Country Profile    


*For Armenia, the survey covers micro firms, i.e., firms with less than five employees. Indicators are not provided for micro firms but the datasets are available on the data portal.

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Coronavirus and fragility

The impact of COVID-19 on Somalia’s private sector

A vendor in Mogadishu sells fruit to a customer standing at a physical distancing signage [Feisal Omar/Reuters]
A vendor in Mogadishu sells fruit to a customer standing at a physical distancing signage [Feisal Omar/Reuters]

By ASTA BAREISAITE & GEMECHU AYANA AGA - 14. January 2021

The COVID-19 (coronavirus) pandemic and the associated health measures taken to contain its spread have jolted the global economy, forcing many businesses to close and retrench employees. But what about businesses in fragile economies that were already facing serious operating challenges even before the pandemic?

To better understand the effect of the crisis on Somalia’s private sector, the World Bank Group (WBG) and United Nations Industrial Development Organization, with support from the Somali Ministry of Commerce and Industry and the Somali Chamber of Commerce, undertook a survey of businesses in the country in June and July 2020. The survey covered 550 formal businesses, including micro-enterprises, across five cities in the country: Baioda, Beledweyne, Bosaso, Kismayo and Mogadishu.

Unsurprisingly, the survey found that COVID-19 has inflicted deep and widespread impacts on Somalia’s private sector, contracting sales and employment by about 30% and leaving most firms with liquidity challenges. A more surprising and heartening result was that Somali firms by-and-large were optimistic for the future and for recovery. This might be because they have already built resilience and patience having struggled through multiple shocks in a country that has long suffered from instability.  

Meanwhile, microenterprises, the dominant type of formal firms in Somalia, appear to have been less affected in terms of disruptions to their operations, sales, and employment compared to larger firms, although they did report facing pervasive liquidity and cash flow challenges.

The findings, outlined below in more detail, are already informing ongoing and planned WBG operations to help Somalia mitigate the impact of the pandemic and carve a path to recovery and growth. For example, the survey is informing the design of a World Bank project to expand micro, small and medium enterprise financing under the newly established Gargaara Financing Facility. The survey’s findings are also informing the International Finance Corporation’s efforts to deepen engagement with Somali traders through the Federal Chamber of Commerce and streamline import and export license processes.

Impact

The shock has widespread and immediate impacts on the private sector. Since the start of the pandemic, about 45% of firms surveyed had to suspend operations, on average for about seven weeks. Firms in Mogadishu, exporters, and those in manufacturing sector were more likely to close. Two-thirds of firms experienced weakened demand while 70% sustained disruptions to their supplies of inputs and raw materials. Sales and employment in June/July dropped roughly by 30% compared to 2019.

Disruptions to business operations, Demand and Supply

Percentage Change of Sales and Employment

The loss of sales has negatively impacted the financial health of businesses, with 90 percent of firms facing liquidity and cash flow challenges. Almost 90 of the firms had already delayed payments on outstanding commitments to suppliers, lenders and tax authorities. About 75% of firms indicated that they would be unable to honor payments due over six months to come. Failure to honor commitments could weaken trust, which is so crucial in an environment like Somalia’s that lacks or has only weak formal institutions.

Percentage of firms facing liquidity shortages and delaying payments

Coping Mechanisms

Businesses implemented several adjustments to minimize the impact of the shock. Changes to working hours and the workforce were the most common adjustments, which included a reduction in working hours (68%), wage reduction (59%), and laying off temporary (64%) and permanent (57%) employees. Half of the firms surveyed started online business activity, while 36% increased delivery and carryout services. About 15% of the firms adapted their products or services to cater to changing demand. 

Adjustments to cope with impacts of the Covid-19 disruptions

Expectations

In June-July, Somali firms were optimistic about future recovery, despite the challenges – perhaps an indication of their resilience gained having lived through other shocks. Almost all interviewed firms expected their sales and workforce to return to normal levels, roughly in about three to four months’ time following the survey.

While optimistic, firms faced immediate challenges and remained vulnerable to closure if the situation worsened. Somali firms don’t appear to have required resources to buffer potential extended effects of the pandemic. Asked how long they would be able to remain in business if sales stopped, they said on average for about 3.5 months. In Baidoa and Bosaso, the reported average was just two months.

Duration of establishments survival if sales stopped (in months)

Support

Four months into the crisis, only 1% of the firms surveyed said they had received some relief support, with another 1.5% expecting to receive relief over the next six months. Given the size of the shock, adjustments by firms alone might be insufficient to navigate the crisis: interventions to support businesses may be needed. Regarding specific support, about 54% of the firms cited deferring payments to service providers and tax authorities as their most desired type of support. Access to new credit was second, cited by 14% of the businesses.   

Top 5 most desired supports by business (% of firms)

Microenterprises

Microenterprises (formal firms employing fewer than five people) reported to be less affected in terms of disruptions to their operations, sales, and employment compared to larger firms, though they faced pervasive liquidity and cash flow challenges. About 31% of microenterprises in Mogadishu suspended operations because of COVID-19, compared to almost half of non-microenterprises (those with five or more employees). Relatively, a larger share of microenterprises compared to larger firms said they enjoyed a boost in demand for their goods and/or services. However, perhaps because of their limited resources to buffer shocks, more than 90% of microenterprises reported liquidity shortages, and almost all have had (or expect) delay payments to suppliers and tax authorities.     

Micro vs non-micro firms in Mogadishu

This survey is an excellent example of collaboration between the World Bank and IFC and with Somali government and other development partners, helping deepen understanding of COVID-19’s effects on fragile economies. And there’s more to come. A second survey is underway to monitor the impact of the shock and the recovery process. Data for both rounds of the survey will be posted on the Enterprise Survey website. A third survey, potentially covering more cities and informal businesses, is planned for 2021.